RDA.V only $0.045

TORONTO - Royal Coal Corp. (TSXV:RDA.V - News), a Toronto-based junior miner with operations in the United States, says it has got a major new sales contract and has struck a deal to expand its coal output in Kentucky.

The company said Wednesday it has received contracts to deliver 234,000 tons of coal from its Appalachian mines at an average sales price of US$85 a ton.

Moreover, in a separate development, Royal Coal said it had negotiated agreements to mine and sell coal from the Flatwoods mine in Kentucky on a contract basis.

Royal Coal said the sales contracts with coal-fired power plant operators are key to the company's growth strategy.

"These contracts are very attractive and give the company a solid foundation of sales for the upcoming year" said Tom Griffis, chairman of Royal Coal.

"The company is pursuing increased production from its own operations and permits as well as the potential of additional production through the acquisition of new assets. Royal Coal also anticipates new term contacts to be signed over the coming weeks for additional sales in 2012."

Royal Coal has open pit coal mines in the central Appalachian coal producing region of the United States, which includes parts of West Virginia, Virginia, Kentucky, Ohio, and Tennessee.

In Wednesday trading on the TSX Venture Exchange, Royal Coal shares rose half a cent or more than 14 per cent to four cents.

In its Kentucky coal deal, Royal Coal said has reached an agreement with Novadx Ventures Corp. (TSXV:NDX.V - News) and the Ikerd Group of Companies to mine their Kentucky properties.

In return, Novadx will get 15 million Royal Coal shares and US$2.50 per ton of coal mined up to US$2.5 million.

Meanwhile, Ikerd and some of its creditors will be paid a royalty of US$2.75 per ton of coal mined on the leases.

Novadx CEO Neil MacDonald said his company was pleased by the deal with Royal Coal, which has mining and loading operations nearby.

"Royal Coal is the ideal operator for these properties given their existing infrastructure and proximity to the properties. We are happy to now share in this opportunity through an equity stake in Royal Coal."

Novadx and Ikerd have been in a legal dispute over their coal operations, but those lawsuits will be put on hold pending payments made to Novadx under Wednesday's announced deal.